Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, July 25, 2014

July 25, 2014

International Trade

Incoming cargo at Puerto Cabello:
  • 25,000 tons of wheat from Canada for MOLVENCA.
  • Over 1,000 tons of gutted and frozen chicken from Bunge Alimentos S.A. and BRF S.A. for CASA
  • 563 tons of powdered whole milk in 25 containers from Argentina for CASA
  • 474 tons of milk in 17 containers from Paraguay for PARMALAT.
  • 207 tons of unsalted butter in 8 vans, from Uruguay for CASA
  • 108 tons of frozen beef cuts , from Uruguay for CASA
  • 44 tons of whisky from the United Kingdom, for DESTILERÍAS UNIDAS.

Brazil to ask MERCOSUR to speed up application of a no tariff policy toward Pacific Alliance countries
Brazil will ask MERCOSUR to apply no tariffs to trade with Peru, Chile y Colombia, in December 2014, as opposed to the scheduled 2019 date. More in Spanish: (Ultimas Noticias,; El Mundo,

Logistics & Transport

Government meets with seven airlines
General Luis Graterol, Water and Air Transport Minister, along with General Rodolfo Marco Torres, Minister of Finance and Public Banking met again with AIR FRANCE, UNITED AIRLINES, CARIBBEAN AIRLINES, AVIANCA, LACSA-TACA, IBERIA, and VARIG GOL in order to reach agreements on the terms of repatriation of their funds. (El Universal,;

Oil & Energy

Weatherford is to expand operations in Venezuela
Weatherford International denies reports of the sale of their Venezuelan assets to ROSNEFT, and says it will increase investments in infrastructure, machinery and training, as well as support local communities here. More in Spanish: (El Universal;


Tata Motors gears up for South American drive with first car plant in Venezuela
Tata Motors is setting up a full-fledged car assembly plant in Venezuela to penetrate the 4.5-million-unit South American market. The plant, to be operated jointly with a partner, would initially assemble the MANZA sedan and INDICA eV2 models from completely knocked down (CKD) kits exported from India, and later be expanded to manufacture other products, sources in the know told FE. While an announcement is likely by September, the assembly plant is expected to have an initial capacity of 20,000 units a year. (The Financial Times,

Economy & Finance

Economic Vice President heads for NYC to contact international banks
Vice-President for Economic Affairs and Minister of Petroleum and Mining, Rafael Ramírez, will soon travel to New York to meet with international banks and investment funds. One and a half months ago, Ramírez visited London and told investors that an exchange convergence would take place in the short term, along with unification of parallel funds. (El Universal,

FORTUNE: How to fix Venezuela’s troubled exchange rate
Most people think that the Venezuelan economy is a basket case on the verge of collapse, and that has been a widespread belief for most of the last decade. During the past two years, however, a number of problems worsened. Inflation has hit annual rates of more than 60%, and the country has faced an increasing shortage of essential consumer goods like milk and toilet paper. Venezuela currently has four different exchange rates. Most dollars are bought from the government at the official rate of 6.3 VEB per U$D and is intended for essential goods, such as food and medicine. Some other importers can buy dollars from the government at a rate of about 11 VEB per dollar on a limited exchange called SICAD 1. There is also SICAD 2, which was introduced in March and involves private sellers, at a rate of 50 VEB per dollar. Finally, there is the unregulated black market where dollars currently sell for about 79 VEB per dollar. A lot of the current problems do seem to be connected to the exchange rate system. Prior to adoption of the SICAD 2 system, the black market rate for the dollar had risen from 12 VEB in October 2012 to 88 VEB in March. Once the black market differential is big enough it increases the incentive for corruption as you can get access to official dollars at 6.3 VEB and sell them on the black market. If inflation continues at current levels, even the SICAD 2 rate of 50 VEB per dollar would eventually become an overvalued exchange rate in real terms. According to the Bank of America’s March report, Venezuela has about U$D 50 billion in foreign exchange reserves (although most of the central bank’s reserves are in gold, these can be easily sold – currently at a sizeable profit relative to their purchase price.) Imports have been shrinking over most of the past year. All of this should give the government a comfortable margin of foreign exchange with which to manage the transition. (Fortune,

Analysts warn U$D 15 billion are needed to dismantle Venezuelan FOREX control
The Venezuelan regime plans to announce its plan to unify the three types of current exchange rate into one in August. However, experts insist the process must be accompanied by an elimination of market restrictions and a series of tax and monetary corrections to prevent the mega-devaluation that would ensue pushes the country into a hyper-inflationary spiral. (Veneconomy,

China increasingly cautious toward Venezuela
The Eurasia Group reports that the Chinese government is increasingly cautious about financing Venezuela. They demand specific projects and seek to keep the same amounts in hard currency deliveries. During Chinese President Xi Jinping's recent to Caracas they only agreed to renew one tranche of the Bi National Fund, for U$D 4 billion. "However, they did not renew the U$D 20 billion Long Term Great Volume Fund which Venezuela was interested in". More in Spanish: (El Mundo,


Retired Venezuelan General Hugo Carvajal detained on U.S. Petition over drug trafficking
A former chief of Venezuela’s military intelligence agency, accused by the U.S. of having ties to drug trafficking and Colombian Marxist rebels has been detained in Aruba and handed over to the DEA on an extradition petition by the U.S government in charges cocaine trafficking. Retired General Hugo Carvajal, a confidant of the late President Chávez, was awaiting confirmation as President Nicolás Maduro’s consul general to Aruba. In 2008, along with the current state governors of Guárico (Captain Ramón Rodríguez Chacín) and Trujillo (General Henry Rangel Silva), he was put on a U.S. Treasury Department blacklist alleging they protected drug shipments for Colombia's terrorist FARC guerrilla, and also provided the rebel group with weapons and logistical help. Venezuela’s foreign ministry claims the arrest by Dutch authorities is a violation of a 1961 international convention governing diplomatic relations and demanded that Carvajal be freed, warning that commercial and energy relations with Aruba could be damaged if he isn’t. President Nicolás Maduro declared "He is kidnapped ... I put my hand in the fire for Major General Carvajal and I will defend him with all the possibilities and strength of the Venezuelan state ... We will not allow Venezuela's honor to be stained.... this ambush strengthens our civilian-military union". Carvajal was arrested upon landing in a private aircraft and at first providing a fake passport. The Dutch government had rejected his appointment as consul due to charges against him. Aruba's Prosecutor says "He had no function here in Aruba, he is not Consul General, and he therefore has no immunity". The U.S. plans to formally request extradition and Carvajal will be taken before a local judge to determine whether his detention complies with international treaties. According to El Nuevo Herald of Miami, he has seven cases pending against him in U.S. courts. In a May 2013 indictment Carvajal is accused of assisting Colombia's North Valley Cartel, including the late Wilber Varela, alias "Jabon", to ship cocaine from Venezuela between 2004 and 2008, while bribing high-ranking military and law enforcement officials. (Reuters,; El Universal,;; Fox News,; The New York Times:; and more in Spanish: El Universal,; and AVN;; El Nacional;

Former Venezuelan judge arrested in Miami for drug trafficking
Another former Venezuela official was hauled into federal court in Miami, accused of taking bribes from South American drug cartels in exchange for help moving large shipments of cocaine to the United States. Benny Palmeri-Bacchi, 46, an attorney and former Venezuelan judge, pleaded not guilty to charges of distributing cocaine to the United States, conspiracy to obstruct justice, money laundering, and extortion in a Miami federal court. He was arrested after he flew into Miami on a family vacation to Disney World. He is charged with Rodolfo McTurk, ex-director of Interpol in Venezuela. The pair allegedly helped Jaime Alberto Marin Zamora, a drug kingpin with Colombia's North Valley Cartel, ship "thousands of kilograms of cocaine" from Venezuela to the United States, according to a federal grand jury indictment in the Southern District of Florida unsealed in December 2013. Prosecutors are seeking to seize U$D 2.5 million from Wells Fargo and Espirito Santo Bank accounts owned by the men. (The New York Times,

Opposition leader Leopoldo Lopez on trial
The trial of one of Venezuela's main opposition leaders, Leopoldo Lopez, has begun in Caracas. He is accused of inciting violence during anti-government demonstrations and has been in custody since 18 February, when he handed himself in to the authorities. Lopez has accused the government of President Nicolas Maduro of jailing Venezuelans for seeking democratic change. There was heavy police presence and road blocks near the Justice Palace, but hundreds of supporters, including Lopez's wife, Lilian Tintori, and parents, gathered outside the court to call for his release. Lopez faces a maximum sentence of 10 years in jail if convicted. During the first session of his trial, López professed that they are "rendering the bill" for his political stance. "This trial will measure the quality of democracy," said the ex-mayor of Chacao municipality. (BBC News,; El Universal,; Reuters,; Fox News,

Denunciations of purported coup plots escalate
Announcements of foiled coups and plots against the government have long been a part of the Chavista discourse. A study by the Caracas-based newspaper Ultimas Noticias counted 63 alleged assassination plots between when Chavez took office in 1999 and his death in 2013. Since then, such claims have come even more frequently. President Nicolas Maduro's government has denounced more than a dozen purported plots since coming to power 15 months ago, according to a tally by The Associated Press. (Fox News,

Venezuela maintains claim on the Essequibo
Foreign Minister Elías Jaua says Venezuela's claims against Guyana over the Essequibo territory remain legal and current under UN rules. More in Spanish: (AVN;

German press reports illegal weapons sales to Venezuela
Germany's "Süddeutsche Zeitung" journal reports that Sig Sauer exported weapons to Venezuela through a Rumanian intermediary, despite a ban by Angela Merkel's government. The arsenal was sent to Rumania for final processing to avoid requesting the German government's permission. More in Spanish: (El Universal,

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

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